If you have offshore bank accounts, you can expect increasing oversight from the IRS. That was the conclusion of a report recently released by the Treasury Inspector General for Tax Administration (TIGTA).
TIGTA’s report found that between 2004 and 2009, there has been an annual increase in the number of individuals filing a Report of Foreign Bank and Financial Accounts (FBAR) with the Department of the Treasury. Orange County tax attorneys note that FBARs must be filed by any individual doing business in the United States who has foreign financial accounts with an aggregate value of more than $10,000.
During the period examined (’04-’09), TIGTA found that FBAR penalty assessments grew from $4.2 million to $20.5 million, an increase of 388%. FBAR penalty collections grew from $1.8 million to $9.8 million, an increase of 444%.
Neither the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), nor the IRS has an established method to estimate the potential population of required filers because the FBAR filing program is a self-reporting program. Many people who file abroad open financial accounts in jurisdictions with bank secrecy laws.
A new reporting requirement is meant to help the IRS verify FBAR information. Taxpayers with an aggregate balance of over $50,000 in foreign assets need to file the new disclosure statement with their tax returns. (The new requirement was included in March 2010 legislation, the Hiring Incentives to Restore Employment Act)
The IRS has revised the FBAR form and its instructions, and is conducting education and outreach efforts on the filing of FBARs.
Source: treas.gov “TIGTA: IRS Is Increasing Its Oversight Of Taxpayers With Foreign Financial Assets” 11/24/2010